The cursor displayed in non-selected windows is one pixel too small in
the vertical direction. The attachment shows a magnified screenshot.

Thanks, but how do you see from that screenshot that the cursor is one
pixel too short? I found nothing to compare it with.

If the window is the *selected* window, the cursor is displayed as a
filled box, and is one pixel taller at the bottom.

Sorry, I don't see this on my machine (Windows XP). To me, both
cursors look identical in their dimensions.

I am also using WinXP. The attached screenshot shows an Emacs started
with -q. The cursor seen there in the lower window is clearly one pixel
smaller in vertical direction. You are of course running a recent CVS
Emacs, arn't you?